The question of the Irish border has almost collapsed the Brexit talks once, remember Mrs May’s first abortive December trip to Brussels, and it is threatening to do so again. A leaked copy of the EU’s proposed legal text of the phase one agreement that was finally reached in December says that if other options cannot be made to work Northern Ireland would be considered part of the customs territory of the EU.
Given the UK’s plan is to leave the customs union, this would—in effect—create an internal economic border within the UK. It is doubtful whether this would be acceptable to any UK government, but it is particularly unacceptable to a British Prime Minister who relies on the support of the Democratic Unionist Party.
So, what happens now? Well, the UK will try and dilute some of the text or get their preferred options, dealing with this through the broader trade agreement or through technology, mentioned more explicitly in the text. They’ll urge the EU not to do something that would force them to collapse the talks. But it is not clear whether the EU is in any mood to help-out: just look at Michel Barnier’s pointed criticisms of David Davis.
The other danger is that some in Brussels might think that the Irish issue should be pushed as hard as possible to try and force the UK into staying in some kind of customs union with the EU. But, again, I can’t see this as being acceptable to this UK government. Ultimately, I suspect the desire on both sides to avoid collapsing the talks will win out. The Brexit talks, though, are undoubtedly in for their rockiest patch yet,